The Flawed Proceeds of Crime Act: Canada Must Amend It to Protect Innocent Citizens

Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act was designed to combat illicit financial activities, but in practice, it has become a deeply flawed instrument of government overreach, financial surveillance, and constitutional violations. Innocent Canadians—law-abiding individuals and businesses—are being swept up in an overly broad system that prioritizes suspicion over evidence, surveillance over privacy, and foreign influence over national sovereignty. This Act must be immediately amended to restore financial privacy, prevent political weaponization, and ensure real due process protections under the Canadian Constitution.

This is the Canadian law designed to combat money laundering and terrorist financing.

While it is necessary but a flawed tool in the fight against financial crime. While it strengthens Canada’s defences it raises questions about financial privacy, regulatory overreach, and international influence.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act has gone far beyond its intended purpose, turning into a tool for mass surveillance, financial blacklisting, and government overreach. If left unchanged, it will continue to violate the rights of Canadians, damage businesses, and compromise financial privacy.

To ensure financial privacy while maintaining an effective anti-money laundering (AML) and counter-terrorist financing framework, Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act must be amended.  

Judicial Oversight: A Three-Judge Panel Must Approve Financial Restrictions

One of the most egregious flaws in the Act is that it allows financial institutions and regulatory bodies to freeze assets, block transactions, and report individuals based on suspicion alone—without requiring any substantial evidence of a crime. This creates an environment ripe for abuse, where citizens can be financially blacklisted without due process.

Proposed Amendment:

✅ Mandatory three-judge panel approval before any financial restriction (account freeze, transaction block, asset seizure) is imposed under the Act.
✅ Requirement for clear evidence of wrongdoing, not just suspicion.
✅ Exception: Immediate action is allowed only in an active terrorist financing case, but must undergo judicial review within 48 hours.
✅ Result: This prevents political abuse, mass financial surveillance, and wrongful persecution of innocent Canadians.

Strengthening Financial Privacy for Citizens & Corporations

The Act's current structure treats all Canadians as potential criminals, forcing banks to report even perfectly legal financial transactions. This is an outright violation of privacy and the presumption of innocence. The law must be reformed to protect the rights of law-abiding citizens and businesses.

Key Amendments:

✅ Limit “Suspicious Activity Reports” (SARs) to High-Risk Cases Only

• Banks should only be required to flag transactions linked to actual criminal activity, not just any transaction over $10,000.

✅ Transparency for Affected Individuals & Businesses

• Canadians must be notified within six months if their transactions were flagged but found innocent. No more secret blacklisting.

✅ Reduce Data Retention Periods to Prevent Financial Surveillance

• The Act mandates that financial institutions store data for over 5 years, enabling mass surveillance.

• Amendment: Limit data retention to 3 years maximum, unless linked to an active investigation.

✅ Protect Cryptocurrency Users from Overregulation

• The law treats all crypto transactions as high-risk, even though many Canadians use crypto legally.

• Amendment: Ensure that only high-risk transactions are flagged while respecting law-abiding crypto users' financial privacy.

Eliminating Regulatory Overreach & Government Abuse

The Act gives the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) broad powers with little oversight. There have been multiple instances where laws like this have been weaponized against political opponents, peaceful protestors, and businesses. This must stop.

Key Safeguards Needed:

✅ Prevent Mass Surveillance of Financial Transactions

• Require a warrant before any mass data collection on transactions.

✅ Rein in FINTRAC’s Expansive Powers

• Establish independent oversight of FINTRAC to prevent overreach.

• Require annual third-party audits to ensure compliance with privacy laws.

✅ Ban Political Weaponization of Banking

• Freeze assets only with a court order—politicians and bureaucrats should not be able to target individuals or groups.

• Parliamentary approval should be required before the Act can be used against peaceful political activists or businesses.

✅ Enforce Criminal Penalties for Wrongful Freezing of Assets

• If a bank or government agency wrongfully freezes an account, they should face criminal liability and financial penalties.

Restoring Canada’s Financial Sovereignty

The Act is heavily influenced by foreign bodies like the Financial Action Task Force (FATF), the United Nations, and the U.S. financial system. This has led to Canadian financial laws being dictated by international actors, rather than serving the best interests of Canadian citizens and businesses.

Key Reforms:

✅ Limit Foreign Influence in Canada’s AML Laws

• No automatic adoption of FATF, U.S., or UN financial restrictions without independent Canadian review.

✅ Prohibit Canadian Banks from Enforcing Foreign Sanctions Without Canadian Approval

• Right now, foreign governments can pressure Canadian banks to freeze assets or deny financial services based on political disputes abroad.

• Amendment: Canadian banks should only enforce sanctions approved by Canadian law.

✅ Strengthen Protections for Politically Exposed Persons (PEPs)

• Ensure PEP monitoring does not become political harassment.

• Limit monitoring to current officials, not past ones.

• Require concrete risk factors before flagging a transaction.

Conclusion: Canada Must Fix This Law Now

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act has gone far beyond its intended purpose, turning into a tool for mass surveillance, financial blacklisting, and government overreach. If left unchanged, it will continue to violate the rights of Canadians, damage businesses, and compromise financial privacy.

Immediate legislative reforms are needed: 

✅ Require a three-judge panel to approve any financial restrictions.
✅ Limit mass transaction monitoring and financial surveillance.
✅ Ensure financial transparency and prevent wrongful blacklisting.
✅ End foreign influence over Canadian financial laws.
✅ Protect law-abiding Canadians from unjust suspicion and government abuse.

Canada must act now to restore financial freedom, constitutional protections, and sovereignty. It’s time to reform this law before more innocent Canadians become collateral damage in the government’s failed approach to financial crime prevention.

SOURCE:

https://lois-laws.justice.gc.ca/eng/acts/p-24.501/

NOTE:

Financial Transactions and Reports Analysis Centre of Canada

Government agency

The Financial Transactions and Reports Analysis Centre of Canada is the national financial intelligence agency of Canada.

FINTRAC was established in 2000 under the Proceeds of Crime Act to facilitate the detection and investigation of money laundering.

Parent organization: Department of Finance Canada

Founded: 2000

Agency executive: : Sarah Paquet, Director and Chief Executive Officer;

Employees: 556 (2024)

Headquarters: Ottawa, Ontario, Canada

Minister responsible: Chrystia Freeland, Minister of Finance